ESADEgeo Daily Digest, 09/10/2017

The United States said on Sunday that it was suspending nonimmigrant visa services at its diplomatic facilities in Turkey after the arrest of a consulate employee, prompting Turkey to halt visa services in America.

Last week, the Turkish authorities arrested a United States Consulate employee of Turkish nationality over alleged links to the network of the United States-based cleric Fethullah Gulen.

The suspended services will affect visas for business people, tourists, medical patients, students, journalists and treaty trader, as well as diplomatic and official visas.

Angela Merkel agreed to try to limit the number of refugees coming to Germany every year, but stopped short of endorsing the hard cap (Obregrenze) demanded by the CSU.

If it holds, the compromise should clear the way for Merkel to begin exploratory talks with the Free Democrats (FDP) and the Greens to form a new government, although the Greens have resisted such limits.

Officials close to the talks stressed that even if the 200,000 agreed figure is reached, no refugee would be turned away at Germany’s border. What’s more, the target number could be raised in the event of a humanitarian crisis, like the one in 2015.

CSU leader Horst Seehofer, who faces a Bavarian state election next year, blames Merkel’s refugee policies for the drop in support. Though Seehofer won the 200,000 figure he was after, Merkel refused to give him what he really wanted the pact to include – a reference to an Obergrenze.

The main argument against Catalan independence is economic. Independence would constitute a shock of an order of magnitude larger than the hardest of Brexits.

The Catalan version of having your cake and eating it is to hope for dual citizenship, but that is utterly unrealistic.

The border between Spain and Catalonia would become a heavily guarded external border of the EU and the Schengen zone of passport-free travel. And as a non-member of the World Trade Organization, Catalonia would have no automatic right to reduced WTO tariffs.

Catalan independence would entail an immediate forced exit from the eurozone. “Catalexit” would constitute a dramatic sudden return of the eurozone crisis. The banking system in one of the world’s wealthiest regions could collapse.

It can even be argued that the presence of a monetary union makes a regional independence movement impossible.

There are three possibilities as to how the EU and, in particular, the eurozone, will move forward.

The first option is a “more united union,” as described by European Commission President Jean-Claude Juncker. His vision rejects a multi-speed Europe, in favor of uniform steps by all EU members. With Brexit apparently a sure thing, Juncker’s “hardline” integrationism has gained some credibility.

But French President Emmanuel Macron has set out his own ambitious vision for Europe, echoing many of Juncker’s proposals, but allowing for more differentiation within the EU. For instance, Macron wants a separate eurozone parliament, which would decide on matters that do not pertain to all members of the European Parliament.

The third – and, it seems, most likely – way forward for the eurozone is business as usual. Policymakers may decide, as they have so many times before, to put ambitious eurozone reforms on the back burner, deciding that the reforms pursued during the crisis are sufficient.

But the monetary union retains a fundamental flaw: the absence of mechanisms capable of forestalling cost divergences across countries that have lost the ability to engage in exchange-rate adjustment.

A multi-speed EU would not be perfect, but it would be better – much better – than the status quo.

The selected pieces do not necessarily reflect the views of Javier Solana and ESADEgeo.